If employees do not take their vacation days, or if you as an employer fail to comply with the Annual Leave Act (semesterlagen) or any applicable collective agreements, you could risk fines, overworked staff, a damaged reputation, and a negative work environment.

In addition, holiday pay liability (semesterskuld) represents a significant cost for employers. The summer period is usually the main opportunity to reduce this liability, but certain events during holidays may affect the number of vacation days actually taken. For example, employees may fall ill during their vacation, meaning they do not use the days that were scheduled, or they might postpone their leave until later in the year. That’s why it’s important to review both the current holiday pay liability and each employee’s remaining vacation balance well before the end of the holiday year.

We recommend checking which employees have not been able to take their holidays during the summer and why, and ensuring that their remaining leave is planned for the rest of the current holiday year.

According to Swedish law, employees are entitled to 25 days of vacation each year. Employees must be given the opportunity to take four consecutive weeks of vacation between June 1 and August 31. Vacation planning should be done in consultation with employees, but if an agreement cannot be reached, the employer always has the final say.

Employers are obligated to ensure that employees take at least 20 vacation days per year. If an employee has remaining days after taking these 20, they are entitled to save the rest for future years. By law, saved vacation days can be carried over for up to five years, and in certain cases, they can be saved for one additional year.

There is, however, a restriction on saving vacation days: employees may not save vacation days in a year when they are also using previously saved days. This means that all current year’s paid vacation days must be used before any saved days can be taken. Remember that the requirement to take at least 20 days applies only to paid vacation days—not unpaid or advance vacation.

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A common question employers face is whether unused vacation days can be paid out in cash. It’s not unusual for some employees to feel unable or unwilling to take all 20 of their vacation days within the year. However, the law is very clear: vacation is meant for rest and recovery and cannot be replaced with monetary compensation.

This rule applies even if the employee requests payment instead of time off. There are, however, a few exceptions where vacation days can be paid out:

Note that saved vacation days are also intended to be taken as time off, not as a cash benefit.

While the Annual Leave Act provides the foundation for how vacation should be regulated, you as an employer may agree to other terms with individual employees or be covered by a collective agreement with different provisions. Remember that any deviation must always improve the employee’s rights—never reduce them compared to what the law stipulates.

Make sure you have procedures in place that support the applicable rules and agreements. Also establish a routine for reviewing vacation balances after the main holiday period so that you can plan remaining leave for employees who still have unused vacation days.